As a researcher with a background in blockchain and digital currencies, I have closely followed the developments surrounding stablecoins and their regulatory landscape. The MiCA regulation, which was implemented on June 30, 2023, has undeniably created an increased demand for compliant stablecoins, and Circle’s USDC is leading the charge in this trend.
The passage of the MiCA regulation has led to a surge in the need for stablecoins that comply with the new regulations. Among the beneficiaries of this trend is Circle’s USDC, which has gained prominence as a top choice in this area.
As a market analyst, I can tell you that according to the insights from Kaiko, a renowned blockchain analytics firm based in France, USDC (US Dollar Coin) is currently dominating the demand for regulated stablecoins.
Increased Demand For USDC After MiCA
According to Kaiko’s most recent findings, approximately 88% of the current stablecoin volume comes from non-compliant options. However, Europe‘s MiCA regulation, effective as of June 30, is forecasted to shift this trend. Market makers are predicted to prefer compliant stablecoins over their non-compliant counterparts in the future.
Over the past several months, notable cryptocurrency exchanges like Binance, Bitstamp, Kraken, and OKX have begun imposing limitations and removing non-compliant stablecoins, such as Tether’s USDT, from their offerings for European users.
Over the past year, I’ve noticed an increasing trend towards compliant stablecoins, which are more transparent and regulated than their counterparts. This shift suggests a growing demand for such alternatives among crypto investors. Among these compliant stablecoins, USDC has gained significant traction.
According to Kaiko’s calculations, the trading volume for USDC saw a significant jump during the week in 2024, reaching a staggering $23 billion. This represented a substantial increase from the $9 billion recorded in 2023 and the $5 billion traded in 2022. Consequently, USDC’s market share reached an unprecedented level, nearing the 14% held by FDUSD.
Last week, Circle, the fintech company behind USDC and issuer of the stablecoin, secured an e-money license from France’s regulatory body, Autorite de Controle Prudentiel et de Resolution (ACPR). This approval makes Circle the first global stablecoin issuer to meet the requirements of Europe’s new MiCA regulatory framework.
The approval indicates that both the USDC and EURC tokens of our platform can now be issued in the European Union, adhering to the Markets in Crypto-Assets (MiCA) regulation.
Centralized Exchanges Fuel USDC’s Growth
Centralized exchanges, or CEXs, played a significant role in increasing USDC trading activity notably during the past year.
As a researcher studying the cryptocurrency market, I’ve observed some noteworthy developments regarding the stablecoin USDC. In March 2023, Binance made the announcement to re-list USDC on their platform. Consequently, USDC’s market dominance on centralized exchanges (CEX) saw a significant surge, rising from an average of 60% to over 90%. Furthermore, Bybit’s implementation of zero-fee USDC trading in February 2023 also played a role in boosting volumes for this stablecoin.
The surge in US Dollar Coin (USDC) popularity can be explained by its increasing role in settling perpetual futures contracts. Specifically on exchanges like Binance and Bybit, the percentage of Bitcoin and Ethereum perpetual contracts denominated in USDC has notably escalated. For Bitcoin, this proportion climbed from a mere 0.3% to a substantial 3.6%. As for Ethereum, the growth was even more pronounced, with Ethereum-USDC trade volume soaring from a modest 1% to an impressive over 6.8% within the same timeframe.
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2024-07-09 19:06